APIC ’08: Falling glycerine prices to impact refiners

27 May 2008 09:59  [Source: ICIS news]

SINGAPORE (ICIS news)--Falling refined glycerine values are weighing on the prospects of glycerine refining as a core business, a trader said on the sidelines of the Asian Petrochemical Industry Conference (APIC) on Tuesday.

Refined glycerine was heard offered by oleochemical manufacturers at $1,600-1,650/tonne FOB (free on board) SE Asia this week, a $300/tonne drop from prices seen two months go.

On the other hand, 80% purity crude material from the US was reportedly offered at around $700/tonne CFR (cost and freight) SE Asia, a $100/tonne increase over the same period.

“The price gap between crude and refined glycerine is now at around $1,000/tonne, and there is money to be made,” a glycerine trader said, although he was quick to ask the key question on most market players’ minds: “How long will it continue?”

He added that if refined glycerine prices continued their downward descent, crude glycerine refining would become increasingly unprofitable.

As Asian prices of refined cargoes plunged on the back of the increasing influx of crude glycerine, concerns over how long the profitability of glycerine refining would last were at the forefront of most glycerine-related discussions on the sidelines of the conference.

With refined glycerine prices tripling in value over the past year due to tightness in supply, palm-based biodiesel manufacturers in Asia - finding it unprofitable to produce and sell palm methyl esters amid rising feedstock costs - quickly capitalised on the supply shortage situation and concentrated on refining and selling low cost crude glycerine from the US and Europe.

Crude glycerine of 80% glycerol content was available at around $600/tonne CFR SE Asia, while refined cargoes of 99.7% purity were offered at around $1,900/tonne FOB Malaysia two months ago, according to global chemical market intelligence service ICIS pricing.

With a $1,300/tonne spread between crude and refined material two months ago, and processing costs estimated by refiners at around $150-200/tonne, the margins for glycerine refiners were extremely comfortable.

The two-day APIC conference was organised by the Singapore Chemical Industry Council.

For more on glycerine visit ICIS chemical intelligence
ICIS custom publishing and The Chemical Daily have produced an official, 84-page special publication on Asian petrochemicals for the APIC event
To discuss issues facing the chemical industry go to ICIS connect

By: Jeremiah Chan
+65 6780 4359

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly